The insurer Willis Group Holdings PLC is buying Towers Watson in an all-stock deal valued at about $18 billion.
Shareholders of financial services company Towers Watson & Co. will receive 2.6490 Willis shares for each Towers share. They will also receive a one-time cash dividend of $4.87 per Towers share.
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The combined company will be called Willis Towers Watson. Willis shareholders will own approximately 50.1 percent, and Towers Watson shareholders will own about 49.9 percent of the business.
The combined company will have about $8.2 billion in revenue and approximately 39,000 employees.
Willis and Towers expect between $100 million and $125 million in cost savings within three years of closing.
The boards of both companies unanimously approved the deal, which is targeted to close by year's end.